Meningitis outbreak: Drug compounder eyes pricey law firm

10:59 PM, Jan 12, 2013   |    comments
October 2012: Tennessee is one of the hardest states hit after a meningitis outbreak is traced back to contaminated medicine from a Massachusetts facility.
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By Walter F. Roche Jr., The Tennessean

The Massachusetts drug compounding firm blamed for a nationwide fungal meningitis outbreak that has hit 140 Tennesseans is seeking bankruptcy court approval to hire a high-priced Washington, D.C., law firm to represent it in an ongoing congressional investigation.

In a petition filed Friday in U.S. Bankruptcy Court in Boston, lawyers for the New England Compounding Center are seeking approval to hire the firm of Akin Gump Strauss Hauer & Feld at rates of up to $1,200 an hour.

According to the petition, the Washington law firm already has been paid a $150,000 retainer by a sister drug company, Ameridose LLC.

The petition states that none of the retainer money has yet been spent and future payments for Akin Gump's services will be paid by Ameridose, not NECC. The same law firm has and continues to represent two of NECC's owners, Barry J. Cadden and Gregory Conigliaro, Ameridose and a third company, Alaunus LLC.

The meningitis outbreak is the subject of investigations by U.S. Senate Committee on Health, Education, Labor and Pensions and the U.S. House Committee on Energy and Commerce.

Cadden was subpoenaed to appear before a Senate panel late last year but refused to answer questions, citing his Fifth Amendment rights.

NECC has been named by state and federal officials as the source of fungus-tainted spinal steroids that have sickened more than 664 people and killed 40, 14 of them in Tennessee.

Earlier this week the U.S. trustee petitioned the bankruptcy court to appoint a trustee to oversee the liquidation, citing what he charged was a conflict of interest involving a recently appointed NECC board member. NECC issued a statement promising to fight the appointment, stating that it would hinder efforts to establish a victims' compensation fund.

According to the filing, Akin Gump will be paid fees ranging from $360 to $1,200 an hour for lawyers and from $135 to $310 an hour for paralegals.

Lawyers for NECC stated in the filing that since the Washington firm will be working only on the congressional investigation and not the bankruptcy itself, "Akin Gump is not subject to the fee application procedures" of federal bankruptcy law.

"NECC submits that the employment of Akin Gump as special counsel would be in the best interest of NECC's estate and its creditors," the petition states.

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